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Roundtable raises stakes on resilience spending

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Convincing governments to increase mitigation spending is tough, but the Australian Business Roundtable for Disaster Resilience & Safer Communities has upped the ante in its latest report on the benefits of action and costs of inaction.

New estimates show the financial toll from natural disasters will rise more than previously expected, while resilience spending offers a greater range of benefits than is usually appreciated.

Annual natural catastrophe economic costs are now forecast to grow 3.4% each year to $39 billion by 2050, up from an estimate in March last year of $33 billion.

Against that, resilience investments can deliver a “double dividend” of avoided catastrophe losses – typically part of cost-benefit analyses – and co-benefits such as improved business and consumer confidence, which can be chalked up even if no disaster eventuates.

“Co-benefits are more difficult to measure and, as such, have rarely been adequately factored into decisions,” says the report, which was compiled by Deloitte.

It emphasises that co-benefits are crucial to local economies and communities, and should be evaluated as such.

Australian and state government spending on direct recovery from disasters is currently about $2.75 billion a year, compared with funding for natural disaster resilience of about $100 million.

“Resilience is a long-term investment that does not often yield large immediate effects, so it is an ongoing challenge for governments,” the Building Resilience to Natural Disasters in our States and Territories report says. “The co-benefits emphasised in this report build a stronger case for overcoming this limitation.”

For the North Wagga flood levee upgrade – one of several case studies – co-benefits would include short-term employment during construction, higher land values, reduced insurance premiums and increased business confidence.

The roundtable was formed in 2012 to influence public policy via evidence-based reporting on the unsustainable cost of disasters on life, property and the economy. Its members are the CEOs of IAG, Munich Re, the Australian Red Cross, Investa, Optus and Westpac.

The group has produced five major reports. Last year it recalibrated disaster-related economic costs to include social impacts, showing the financial toll from catastrophes could soar well beyond earlier estimates.

At that time the roundtable said it would keep demanding action on its recommendations. With the latest study it has kept the pressure on and honed its approach.

The new cost estimate includes an additional year of data and improved methodology that provides more rigour around social costs associated with natural disasters. The report focuses on the role of states and territories while pressing for a wider collaborative approach.

Recommendations include mainstreaming resilience across policy areas so it is not just part of emergency management portfolios. It identifies key opportunities for states and local governments in planning, land use and building controls.

It proposes considering double-dividend benefits when prioritising resilience investments and improving understanding of disaster risks and costs to society. It says all stakeholders should collaborate in a co-ordinated approach to build resilience and address long-term disaster costs.

Engaging business, community and non-profit groups in local planning helps collective buy-in, innovation and sustained resourcing, and accelerates change, according to the report.

“Without collective action, complacency is a risk and disaster impacts are likely to be much worse,” it says. “This requires shifting the resilience agenda from an emergency management issue to a whole-of-government and whole-of-nation issue.”

Australian Red Cross CEO Judy Slatyer says relatively small investments in areas such as education, emergency kits and encouraging connected and strong communities will speed up recovery, which reduces the personal and economic costs of disasters.

“Natural disasters have a deep social impact on individuals and communities that can last for years,” she says.

The report breaks down different types of risks faced across states and territories, and varying approaches when it comes to improving resilience. “There are many successful examples of resilience measures and many common barriers too,” it says.

Queensland has been the most disaster-prone state over the past decade, incurring an economic cost of $11 billion a year, or 60% of the national total. It is also one of the only states with a community resilience target and strategy for disaster resilience.

The report says it has, conservatively, excluded from its forecasts to 2050 any increase in the economic cost of natural disasters due to climate change, although events are expected to increase in frequency and severity.

“While the science has advanced, it remains difficult for experts to model the timing, location and intensity of disaster events in response to climate variability and change,” it says.

Even without climate change, the risks are likely to continue rising as populations increase.

Mitigation and resilience will become even more important as urban areas expand and become more densely built up. The roundtable’s report shows governments and communities can’t afford to be complacent.